EPA biofuels rule among a host of changes to House bill

U.S. EPA would be prohibited from considering greenhouse gas emissions from so-called indirect land-use changes when implementing a separate biofuels law under an agreement among House Democrats on the energy and climate change bill.

The announcement from Energy and Commerce Chairman Henry Waxman (D-Calif.) and Agriculture Chairman Collin Peterson (D-Minn.) is simply one of dozens of changes, large and small, made this week to the bill that passed Waxman's panel last month.

Peterson said the plan would bar EPA, for at least a half-decade, from including emissions linked to indirect land-use changes in agency rules to implement the renewable fuels standard, or RFS. The RFS was expanded under a 2007 law that also requires ethanol and other fuels to have lower lifecycle emissions, by varying degrees, than conventional fuels.

"It takes the international land use out so it is not in the calculations," Peterson told reporters. "It takes it out of the rule." He said the issue would be studied by an outside group, likely the National Academy of Sciences, to determine how to proceed.

At the end of five years, the Agriculture Department, EPA and the Energy Department would have to sign off on whatever approach emerges from the study for weighing these emissions. "Any one of them can veto," Peterson said. If they do all agree, it would still be another year before it went into effect to provide time for congressional review.


The resolution is a major victory for Peterson and the ethanol industry, which has fought to block EPA from calculating these emissions. An example of these emissions would be the clearing of rainforests in other countries to grow crops for food -- which releases stored carbon -- to compensate for increased use of U.S. farmland to make fuels feedstocks.

Opponents of the calculations argue the links are tenuous and the science too hazy for them to be part of EPA's rules. Growth Energy, an ethanol trade group, last night cheered the changes. "We congratulate Chairman Peterson and Chairman Waxman on reaching a common sense solution to this very controversial issue," said Tom Buis, CEO of the group.

But Anna Aurilio, director of the Washington office of Environment America, criticized the concession. Environmentalists say such emissions must be considered to ensure that biofuels policy does not aid ventures that could worsen global warming and deforestation. "No one should be trying to legislate away scientific inquiry," she said.

Dan Weiss, the director of climate strategy for the liberal Center for American Progress, said removal of this authority is problematic in theory but may not ultimately be a problem. Under the 2007 law that expanded the RFS, the bulk of the corn ethanol portion of the mandate, which reaches 15 billion gallons, is exempt from the lifecycle emissions analyses anyway.

Biomass limits still under discussion

A major issue that remains unsettled is limits on sources of biomass that can be harvested to make biofuels under the 2007 RFS or electric power under the climate bill's proposed renewable electricity standard.

Some members including Rep. Stephanie Herseth Sandlin (D-S.D.) say there are too many limits on biomass from federal forests, even though Waxman softened the language when the bill went through his committee. The restrictions are also aimed at preventing new land clearing.

Peterson said the language from the Energy and Commerce Committee bill remains in place, but he held open the possibility that this could change as lawmakers rush to complete and circulate new text on the farm state deals as soon as this morning. The language could adopt the less restrictive definition of renewable biomass in the 2008 farm bill, he said.

Herseth Sandlin said any default plan to stick with the Energy and Commerce Committee's definition of renewable biomass would be a major problem for her. "I was disappointed that it did not sound to me like their deal included a biomass definition that is satisfactory to me," she said. "If that cannot be worked out prior to a scheduled vote, it will be very hard for me to be able to support it."

Transmission, rural cooperatives

Peterson said there are also agreements on how the measure will address carbon markets, and Waxman said a manager's amendment he hopes to unveil today will include measures on transmission siting.

Lawmakers including Rep. Jay Inslee (D-Wash.) have been seeking a way to provide the Federal Energy Regulatory Commission new powers to site transmission lines when states cannot reach agreements. Waxman said the plan would give FERC new power in the West.

"We will have an amendment on transmission as it relates to the Western states," Waxman said.

Peterson also said he and Waxman reached an agreement on another matter dealing with rural electric co-ops. Peterson said that while it will not be in the House bill now, Waxman agreed to ultimately back a Senate plan that would allow rural co-ops to use money from USDA's Rural Utilities Services to invest in stakes in new nuclear power plants.

"If they can buy into a new nuclear plant that will give them room to get closer to being even on their cap," Peterson said.

On Tuesday, Peterson and Waxman include 0.5 percent of allocations for small electric utilities that have under 4 million megawatts of capacity, as well as a cap on free allowances going to merchant coal generators and other power companies to ensure they do not make any windfall profits (E&E Daily, June 23).

Changes large and small

Before yesterday's big announcement between Waxman and Peterson, House Democratic leaders tucked a host of changes into the massive bill in an attempt to win votes and move the bill to the floor.

The 1,201-page version of the bill is peppered with changes that largely reflect requests from the eight other committees that also had jurisdiction over the bill (E&E Daily, June 23).

Some of the most significant alterations involve changes to how the widely coveted emissions allowances would be distributed. The revised bill offers new language giving the country's smallest power utilities a free 0.5 percent slice of the cap-and-trade program's emission allowances as well as a provision that grants an additional 0.25 percent of the emissions allowances to so-called small business refiners (E&ENews PM, June 23).

The bill would also offer states more flexibility in using allowances aimed at supporting renewable energy and energy efficiency programs. The legislation would require states to use at least 12.5 percent of their allowances for energy efficiency programs and renewable energy deployment and manufacturing support.

But the new draft would permit states to use the allowances to expand existing state energy efficiency programs if they can demonstrate that the additional funding would supplement, and not supplant, existing state funding slated for those programs. Previously, the bill would have prohibited states from using portions of that money to fund energy efficiency programs that already existed.

"There was a legitimate concern that this money should be considered additive," said Seth Kaplan, vice president for climate advocacy at the New England-based Conservation Law Foundation. The revised provision is the correct response, he said, because states will still receive the energy efficiency money but with the stipulation that it must be additional, rather than serve as a replacement.

"Just looking at the facts on the ground, a state that has existing energy efficiency programs would be most positive about this change," Kaplan said, citing states in the Northeast and California as examples.

Another revision to the bill would allow the destruction of chlorofluorocarbons, or CFCs, to count as offsets as part of the global warming pollution reduction program, if permitted by the EPA administrator. The previous version of the bill would have promoted CFC reduction under a separate schedule. CFCs are greenhouse gases that also contribute to ozone depletion.

The revised bill would also require that activities supported by an international deforestation reduction program include reduced emissions from forest degradation, which had been optional under the first draft, and states that activities funded through the program are not eligible for offset credits.

Other key changes include:

  • Language to ensure that the Interior Department is involved in developing the national strategy for carbon capture and sequestration.
  • A provision to ensure that Interior is involved in the carbon capture and sequestration task force.
  • Language that would integrate new greenhouse gas reduction planning measures into the existing transportation planning process.
  • Language to give the administrator of NASA the ability to authorize the production of limited quantities of ozone-depleting substances, in consultation with EPA, for the purpose of aviation or space vehicle safety.
  • The addition of the field of climate change adaptation to a section authorizing the Department of Education to award grants to universities and colleges to develop programs of study in renewable energy, energy efficiency and other programs.
  • The inclusion of a House Science Committee bill that would establish a National Climate Service within the National Oceanic and Atmospheric Administration (ClimateWire, June 4).

Click here to view the bill.

Click here for a summary of the changes.

Reporters Darren Samuelsohn and Noelle Straub contributed.

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